Florida Insurance Consumer Advocate Robin Westcott today called for the state’s top regulator to support her in asking legislators to make clear property insurers cannot deny claims and void policies based on consumer credit information more than 90 days after taking a policy.
“This practice is reprehensible and should cease immediately,” Westcott said.
As The Palm Beach Post reported last month, a growing number of customers of the state’s largest private property insurer, Universal Property & Casualty Insurance Co. of Fort Lauderdale, say the company took premiums for years but voided policies when they filed claims. That has meant customers were left with no coverage for things like fire or water damage that marred or destroyed homes, on the grounds they had failed to disclose in their applications items such as a tax lien satisfied in another state years before.
Westcott asked Florida Insurance Commissioner Kevin McCarty to endorse the initiative. A spokeswoman for McCarty had no immediate response late Wednesday.
McCarty’s office has said little publicly about concerns Westcott raised in October, when she called for a formal investigation by the state’s Office of Insurance Regulation.
A Universal spokesman last month defended the company’s practices and said it was up to customers to provide correct information on applications. Universal’s parent company reported profits rose 50 percent to $30 million last year.
Westcott said using information from credit reports or public records can be legal and appropriate when deciding to take customers, but the consequences can be unjust and “heart-wrenching” if such data is used as a pretext to deny claims sometimes years later. Agents often fill out application for customers, other critics of the practice have noted, and they or customers themselves may not know or remember all the items from years past, sometimes involving family members or spouses, that could be used to void the policy.
“Florida consumers deserve protection from this unfair practice,” Westcott said.
In a letter to McCarty, Wescott said she believes the practice violates current law but seeks a change in the law — such as by amendment to pending legislation not identified in the letter — to make “crystal clear” such information should not be used to deny claims.
The letter can can be read here.

Updates: Westcott is trying to get an amendment to SB 1046 in committee.

Statement from Universal: “The insurance underwriting process inherently depends on applicants providing accurate information in their insurance applications. This is the case in the substantial majority of applications received by Universal Property & Casualty Insurance Company, and the company believes its underwriting process allows it to serve its customers in a cost-effective manner for the benefit of all Floridians.”

Statement from Office of Insurance Regulation: “The Office is well aware of the allegations of post-claim underwriting in the homeowners market and has thoroughly and comprehensively been inquiring into the matter. The Office supports the responsibility of companies to appropriately underwrite policies within the first 90 days of the policy period and for legislation that would provide stronger protections for consumers.”